Major depression afflicts approximately 25% of patients with Alzheimer's disease (AD). In addition to mental suffering, it is associated with a series of "non-mood" consequences: behavioral disturbance (such as aggression), poor cognition, poor self care, caregiver depression, caregiver burden, and early entry into the nursing home. Since major depression is treatable, the excess disability it brings to the Alzheimer patient is potentially avoidable. The use of antidepressants to treat major depression in Alzheimer's is supported by two placebo controlled trials, although a third trial does not show a benefit for antidepressants over plaebo. No published study has assessed whether antidepressant treatment reduces the non- mood consequences of depression. An improvement of the latter would imply a reversal of the accelerated nursing home entry of depressed AD patients. Finally, the safety of antidepressant treatment in depressed AD patients is poorly studied. A conclusive demonstration that depression reduction in AD can be accomplished safely with antidepressant medications, and that depression reduction is associated with improvements in activities of daily living, non- mood behavioral disturbances, caregiver burden, and caregiver depression would have major clinical and cost implications for the care of the Alzheimer patient. This grant request proposes a 12- week, double blind, flexible dose, placebo controlled trial of sertraline in the treatment of outpatients with AD and co-morbid major depression. The hypothesis is that antidepressant treatment is superior to placebo in improving mood, in improving cognition, in reducing physical dependency, in reducing caregiver depression, and in reducing caregiver burden. It is also hypothesized that the degree of depression reductio is correlated with these improvements. It is further hypothesized that the 12 week safety profile of sertraline when compared to placebo is acceptable, especially with regard to risk of falls, sleep disturbance and delirium. One hundred community residing outpatients with probable Alzheimer's disease who also meet DSM-IV criteria for major depressive episode will be recruited into the study. They will be randomized to sertraline or placebo and followed through weekly telephone contact by an experienced clinical trials team. Outcomes will be assessed every three weeks, for a total of four follow-up data points. Scales assessing the following domains will be used: depression, cognition, behavioral disturbance, physical dependency, delirium, falls, sleep, other side-effects, caregiver depression, caregiver burden, caregiver functioning, and caregiver health.